Inside Game

Everyone likes to get an attaboy from the boss: “Great job!” enthused D.C. Attorney General Karl Racine, in an August 2016 email to his staff and officials at the Department of Consumer Regulatory Affairs.

Racine had just gone to court to enforce DCRA’s effort to halt installation of allegedly illegal digital advertising signs that were popping up all over town. “Thanks for partnering with [Office of Attorney General] on this most important matter.”

The culprit, Digi Media Communications, had strong political ties. (See below for previous story links.) But its competitors had ties to Racine, and a pipeline to the case his office had filed. DCRA Assistant General Counsel Jennifer Barbour promptly forwarded Racine’s message to Fred Cooke,a lobbyist for Outfront Media and Clear Channel who was teamed up with Racine’s former law partner at Venable LLC, Claude Bailey, lobbyist for national billboard company Capitol Outdoor.

By that time, Barbourhad exchanged more than 130 emails with Digi’s competitors, according to court filings: Drafts of attorney work product, legal strategy, analysis, internal discussions. In a July court hearing attended by District Dig, Judge Florence Pan reviewed a batch of those emails, which Digi has characterized as evidence of a conspiracy by an “inside strategic team” to obstruct its business activities.

Pan struck a more moderate tone, as she wondered aloud at one point about the government’s motive. “It looks to me that Ms. Barbour was not really thinking about what she was doing,” the judge said. “It’s really extraordinary that she did this. Why would she do this?”

The case against Digi has a tortured history. It’s a “bet the company” battle over LED displays that could transform the city’s visual landscape and generate millions of dollars for sign vendors, investors and commercial landlords.

And though Racine grabbed headlines at the time for playing tough cop, Barbour’s exchanges with Cooke and Bailey have opened the door for disclosure of additional internal emails and for her to be deposed. Two years in, Racine’s case is bogged down in a legal morass.

Racine’s office says it had no intent to work with Digi’s competitors to give a strategic advantage. The third-party communications between Barbour and the lobbyists are nothing more than “purported mishandling of certain privileged communications,” his lawyers have argued.

ButDigi is in attack mode, and the facts are not pretty.

Planning for the installation of dozens of digital signs began in 2014, court documents state. In December 2015, Cooke and Bailey began attending meetings of the Construction Code Coordinating Board, warning of a “proliferation of large format digital screens on the lobby level of office buildings” if it did not close a loophole to signage law that Digi was banking on.

In the summer of 2016, as the administration of Mayor Muriel Bowser sought to close the loophole, Barbour began warning commercial landlords that Digi’s signs were in violation of permit regulations. Cooke began investigating the signs and reporting back to Barbour, who would inform Bailey of DCRA’s enforcement efforts.

After Racine filed for a temporary restraining order and preliminary injunction, Barbour began consulting with Bailey and Cooke on legal strategy as well, Digi contends. “There can be no innocent explanation as to why a District-employed attorney representing DCRA would meticulously be updating Digi’s competitors on the District’s actions,” the sign company alleges. “Worse yet, in at least one email identified so far, Ms. Barbour seems to take direction from Mr. Cooke.”

Cooke, who once co-counseled with Racine in a high profile political corruption case, tells The Dig that he prefers not to “litigate in the media.” He says he disputes the premise of the accusations. “Well I guess you shouldn’t believe everything you read. Just because it says something doesn’t mean it’s true.” Bailey did not return calls for comment.

Yet the emails leave little doubt that the lobbyists were considered part of, if not overseeing, DCRA’s sign regulation enforcement effort. On July 13, 2016, Barbour updates Bailey on her communication with Digi’s joint venture partner regarding the alleged permit violations, and on August 2, she forwards to Cooke her communications with lawyers for Digi and landlords of buildings where it has installed signs.

“Thank you very much. You folks are all over this issue,” writes Cooke to Barbour, on August 8, 2016.

“Hi Jennifer,” chimes Alice Kelly, manager of policy and legislative affairs for the D.C. Department of Transportation, which also has jurisdiction over outdoor signage. “The other sign companies are doing a great job of helping us enforce. See email below for a report on what was observed today. Do you have any update on the enforcement actions against these locations?”

Barbour wasn’t the only D.C. government employee working with Digi’s competitors. In one email sent August 12, 2016, another lobbyist for Capitol Outdoor wrote to Cooke, Bailey, Bailey’s law partner and the company’s founders John Polis and Chris Tavlarides to update them on conversations with Bowser’s office regarding a delay in new regulations that would close the pivotal loophole.

City Administrator Rashad Young had delayed the regulations at the behest of Digi’s lobbyists, wrote J.R. Clark of Squire Patton Boggs, who headed off the delay. “He [Rashad Young] realized that I am with Capitol Outdoor and he said he wouldn’t stand in the way of [the regulations] going forward…He also didn’t realize Fred [Cooke] and Claude [Bailey] were working with getting them published as well.”

Clark also describes DCRA Director Melinda Bolling as being “on board with the regulations.”

A few days later, on August 15, Polis informs Cooke and Bailey that he is talking with Barry Kreiswirth, general counsel and senior advisor to the city administrator, about hastening publication of regulations that Digi had sought to delay.

On August 17, 2016, Barbour alerts Cooke to communications between DCRA officials and a lawyer for Digi who was contesting the enforcement effort. As that effort ramps up, so do the communications between Barbour and the lobbyists for Digi’s competitors.

A week later, on August 24, Cooke briefs Bailey and Capitol Outdoor on conversations he has been having with Barbour regarding Digi’s struggle to keep its signs in place. In turn, Barbour lets Cooke know that she will forward his input to DCRA inspector Clarence Whitescarver to assist him in his survey of Digi’s sign installation plans.

She also forwards to Cooke her communications with Whitescarver and a lawyer from Racine’s office.

After Barbour accompanies Whitescarver on his survey, which would become part of Racine’s lawsuit, she sends his draft declaration to Cooke with a note, on August 28, 2016: “Not finalized yet but the gist, fyi…”

“It’s quite extraordinary,” Judge Pan said at the hearing last month, referring to that email as “the most striking example” of an inappropriate disclosure. “She is disclosing not-yet finalized drafts.”

By the time Racine is ready to file his lawsuit against Digi, the lobbyists for Capitol Outdoor and Outfront Media are fully briefed. A short time after Racine files the lawsuit, Bailey emails Cooke and their respective partners to inform them that he has spoken with Barbour, who “will share our thoughts about strategy” with the Assistant Attorney General prosecuting the case. “I just spoke with Jennifer Barbour and she thinks it would be a good idea to meet next week to discuss a strategy for the Sept. 19th hearing,” Bailey writes.

“Why is Ms. Barbour meeting with the Competitors to discuss the District’s legal strategy on the Temporary Restraining Order?” Digi’s lawyers ask in their court filings. “Was the Attorney General’s Office aware that the legal strategy Ms. Barbour was providing in her role as an attorney for DCRA was not her strategy, but was, in fact, the Competitor’s strategy, laundered through her?”

Through additional discovery, Digi’s lawyers aim to answer its own questions, though they have an idea of what was going on: “In short, Digi’s competitors were treated as part of the District’s inside enforcement team when it came to the efforts to shut down Digi’s business. Of course it goes without saying that hindering competition is not a legitimate public interest when it comes to regulatory or legislative action.”

Lawyers familiar with the case and former regulatory officials tell The Dig it’s not uncommon for a company in a competitive marketplace to cry foul to the authorities. But for a lawyer, a government lawyer no less, to share privileged communications with lobbyists whose clients will benefit from legal enforcement is virtually unheard of.

The revelations hit close to home for Racine: Venable, where he and Bailey were partners, has represented Cooke’s client Outfront Media in large-scale transactions, including when Racine was managing partner; and campaign finance reports show that on January 10 this year, Racine reimbursed the firm for $1,342 in “catering and refreshments” for a private event.

More troubling, say lawyers familiar with the case, is that while Digi’s competitors were allegedly undermining its venture, Outfront Media, represented by Cooke, also was granted a $3 million extension of an exclusive contract to advertise throughout the Capital Bikeshare system.

Meantime, the case-in-chief does not appear to be going well for Racine. Last December, Judge Pan chastised one of his prosecutors for coming to court with exhibits at the last minute, and then allowed Digi to install 10 signs that previously had been halted.

Now that she has gotten a behind-the-scenes look at how DCRA and Racine’s office were intertwined with lobbyists for Digi’s competitors, she appears intrigued by what further discovery may show: “This could be a goldmine for you,” Pan said with a wry smile to Digi’s lawyers. “But I don’t know yet.”

*In an email received after publication, Attorney General Racine issued the following statement:

“I hold our attorneys at the Office of the Attorney General to very high professional standards. While the actions of the DCRA lawyer fell short of professional obligations, no one alleged—nor did the Court find—that any attorney employed by OAG acted improperly. In response to the circumstances in the Digi case, OAG is now developing training modules that will focus on the ethical and professional obligations that all lawyers must follow under the District of Columbia Rules of Professional Conduct. This training will be made available to all lawyers who are employed by the District of Columbia.”

**To read more about the digital sign controversy, and allegations of improper influence involving Ward 2 Councilmember Jack Evans, here are links to previous stories by District Dig: